REDUCING THE EFFECT OF SUNK COSTS ON INVESTMENT DECISIONS: ANALYSIS MODERATED BY MANAGERS' REPUTATION, FINANCIAL CONSTRAINT AND BUSINESS STRATEGY
DOI:
https://doi.org/10.5380/rcc.v16i1.89727Keywords:
Sunk Costs. Reputation. Prospective Strategy. Investments.Abstract
The study aimed to verify how the concordance effect, concern for reputation and financial constraints influence managers in strategic business investment decisions. A survey-type research was carried out, using questionnaires sent via email to managers of organizations in the agricultural sector, resulting in a sample consisting of 51 responses. The data was analyzed using Spearman, Chisquare and Kruskal-Wallis correlation tests to identify the effect of sunk cost and association with the respondents' profiles. The results reveal that the concordance effect impacts the probability of investment continuity, indicating an incipient change towards rational behavior, motivated by the managers' profiles. The absence of information about sunk costs increases the probability of managers remaining with investments, contrary to expectations of prospective strategic behavior. Managers demonstrate a low probability of interrupting unsuccessful investments, as they fear suffering possible negative effects on their reputation. However, they were prone to discontinuing projects with lost costs when there is information about financial constraints. The study fills a theoretical gap by exploring the reduction of the sunk cost effect in the decision-making process, considering the influence of managers' reputation, financial constraints and prospective strategy. The findings contribute not only to reflection on the qualifications of decision makers, but also corroborate discussions about sunk costs in the decision-making process, especially in the management and strategy of organizations to create value and maintain levels of competitive advantage. in the market.References
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